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Public sector lender Canara Bank reported a 26.86 per cent year-on-year (Y-o-Y) growth in net profit to Rs 3,656 crore for the October-December period, driven by loan growth.
Net interest income — the difference between interest earned and interest expended — grew by 9.5 per cent to Rs 9,417 crore, while other income grew by 7.75 per cent to Rs 4,295 crore.
Profit from the sale of investments fell to Rs 310 crore from Rs 386 in the year-ago period due to the hardening of bond yields in the October-December quarter. The bank has made a cash recovery of Rs 2762 crore including recovery from written off accounts during the quarter which aided bottomline.
Net interest margins (NIMs) for the third quarter were 3.03 per cent compared to 3 per cent in the previous quarter and 3.05 per cent in the year-ago period.
The cost-to-income ratio for the quarter was higher at 50.37 per cent compared to 44.77 per cent in the year-ago period.
“It is because of an additional provision towards the bipartite settlement of employee wage revision at 17 per cent. Whatever was due until December, we have provided the entire amount. The majority of retirement benefits have also been considered,” K Satyanarayana Raju, managing director and chief executive officer of Canara Bank, said.
Domestic loan growth of the Bengaluru-based lender increased by 12.56 per cent to Rs 9 trillion, aided by a 14.56 per cent growth in retail, agriculture, micro, small and medium enterprise segments. Retail credit growth was 12.14 per cent, while corporate loans recorded a growth of 8.26 per cent.
Domestic deposits grew by 8.07 per cent to Rs 11.67 trillion, although growth in current and savings account (CASA) deposits was only 5.05 per cent.
Term deposits grew by 9.53 per cent, of which retail growth was 5.92 per cent.
“Although there is pressure on interest rates on deposits, we were able to maintain NIM above 3 per cent. Our area of concern continues to be CASA. Although it has grown, it’s not to the extent of deposit growth,” Raju said.
Gross non-performing asset (NPA) ratio stood at 4.39 per cent as of December 2023, compared to 4.76 per cent in September 2023, and 5.89 per cent as of December 2022. Net NPA ratio stood at 1.32 per cent as of December 2023, compared to 1.41 per cent in September 2023, and 1.96 per cent as of December 2022.
The lender improved its provision coverage ratio (PCR) from 86.32 per cent to 89.01 per cent Y-o-Y. While the overall provision declined from the year-ago period, Canara Bank decided to increase the NPA provision to Rs 2,106 crore from Rs 1,920 crore in the year-ago period to boost PCR.
The bank was able to bring down credit costs below 1 per cent, which was at 0.97 per cent compared to 1.02 per cent in the July-September quarter.
The capital adequacy ratio (CAR) was at 15.78 per cent as of the end of December. The increase in risk weights impacted the CAR by 52 basis points (bps), although ploughing back of profits increased it by 10 bps.
